Escondido to look into using reserves again

Budget gap had council considering closures, service cuts

ESCONDIDO’S BUDGET WOES

What: Escondido faces a $10.5 million deficit on its $72.9 million general fund budget, which pays for city services. The gap is caused by a continued, steep decline in sales tax revenue, which makes up nearly 40 percent of the city’s income.

What’s happening: The City Council last night decided to explore the option of using up to $13 million of the city’s $20 million in remaining reserves, and raising recreation fees.

Instead of closing a community center, swimming pools and parks and cutting police and fire services, Escondido’s City Council decided last night to explore the option of using more reserves to bridge a widening budget gap.

In a heated debate that often involved finger-pointing over who spent too much money, the council majority finally acknowledged that the city could not cover a $10.5 million shortfall on a $72.9 million budget this fiscal year just by making cuts. The fiscal year ends June 30.

Mayor Lori Holt Pfeiler proposed using more than half of the city’s $20 million in remaining reserves, saying that Escondido needs to provide adequate services.

Pfeiler’s suggestion drew fire from council members Marie Waldron and Sam Abed, who is running for mayor this year.

Abed insisted there is more government fat to be trimmed. Waldron wanted to maintain police and fire services and infrastructure while reducing other expenses.

In conjunction with the use of reserves, Escondido also is considering raising recreation fees and new revenue sources. The new sources will not include an increase in sales tax or a parcel tax, as suggested by Councilwoman Olga Diaz. Her idea was shot down immediately by the majority.

Escondido’s crisis came from the city’s dependence on sales tax revenue, which has plummeted. Sales tax revenue makes up nearly 40 percent of the city’s income.

By comparison, Carlsbad, which, like Escondido, has an auto row, receives 21 percent of its general fund revenue from sales tax.

Escondido is not alone in its deficit predicament. Other municipalities, including Carlsbad, National City, Coronado and San Diego, are facing deficits.

On Monday, the Escondido City Council’s budget subcommittee recommended laying off employees; closing the city’s two swimming pools, the East Valley Community Center and the California Center for the Arts; leaving four police officer positions vacant; and reducing the Fire Department’s industrial inspections. Those ideas were discussed last night.

The city has been trying to diversify its revenue base with such measures as inviting the Chargers to build a stadium there, tweaking land use to allow high-tech business development in industrial zones and luring a 196-room full-service Marriott Hotel downtown with a $12 million city investment.